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The global oil market has stabilized somewhat since oil prices were trading below $30/bbl earlier this year. However, offshore oil services stock Franks International NVFI 4.16% is still struggling to find its footing.

With the stock already down 33.4 percent in 2016, Morgan Stanley analyst Ole Slorer doesn’t see much reason for optimism ahead of the company’s Q3 earnings report expected out on Thursday. Slorer downgraded Franks International to Equal-Weight and expects the company to miss consensus earnings expectations.

According to Slorer, other offshore service providers like Oceaneering International OII 3.65% and Dril-Quip, Inc.DRQ 0.83% have delivered a mostly cautious message so far this quarter. Morgan Stanley is expecting Franks to do the same.

“In Q3, we expect FI to continue to see large revenue declines in the GoM, as the GoM rig count was down ~20% q/q, the highest in 5 quarters, while we expect int’l sales to also show further declines as additional deepwater rigs rolled off contracts,” Slorer explains.

The good news for Franks shareholders is that Morgan Stanley still sees Franks as one of the most-improved businesses in the offshore category. Slorer specifically mentions improvements to capital efficiency and notes Franks' superior margins and free cash flow relative to peers.